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PP RUEHLMC
DE RUEHLP #0871/01 1661313
ZNY CCCCC ZZH
P 151313Z JUN 09
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC PRIORITY 0996
INFO RUEHAC/AMEMBASSY ASUNCION 9064
RUEHBO/AMEMBASSY BOGOTA 6446
RUEHBR/AMEMBASSY BRASILIA 0420
RUEHBU/AMEMBASSY BUENOS AIRES 7630
RUEHCV/AMEMBASSY CARACAS 4676
RUEHPE/AMEMBASSY LIMA 5012
RUEHMD/AMEMBASSY MADRID 4389
RUEHMN/AMEMBASSY MONTEVIDEO 6323
RUEHQT/AMEMBASSY QUITO 7294
RUEHSG/AMEMBASSY SANTIAGO 2058
RUEKJCS/SECDEF WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUEHUB/USINT HAVANA 1800
RUEHLMC/MILLENNIUM CHALLENGE CORP

C O N F I D E N T I A L SECTION 01 OF 03 LA PAZ 000871 
 
SIPDIS 
 
STATE PLEASE PASS TO USDA FAS WASHDC 
 
E.O. 12958:  DECL:  06/08/2119 
TAGS: ECON PGOV AGR FAO FAS IFAD IICA BL EFIN PINR
EAID, KTIA 
SUBJECT:  PL-480: TWO YEARS OF FRUSTRATION 
 
REF:  A. 08 LA PAZ 3236 
      ¶B. 08 LA PAZ 2601 
      ¶C. 08 LA PAZ 1175 
 
Classified By:  A/EcoPol Counselor Joe Relk for reasons 1.4 (b, d). 
 
- - - - 
Summary 
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¶1.  (C) As the Bolivian State presses forward with its 
desire to more fully control U.S. donations, the attempt to 
program and use PL-480 Title I funds provides an insightful 
case study.  Following the monetization of agricultural 
commodities in 2004-05, about $6.7 million was planned to be 
jointly programmed for agricultural programs.  Despite 
agreeing to fund several projects for more than $4 million, 
less than $50,000 has been disbursed over the last two years. 
 Despite our consistent and patient push for resolution, five 
characteristics of the current Bolivian state have left the 
funds unused: 1) Ever changing ministers and vice-ministers; 
2) Turf fights between ministries; 3) An anti-U.S. attitude 
in key leadership positions; 4) Attempts to use funds for 
political reasons; and 5) Nationalistic bristling over being 
treated with "dignity". 
 
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PL-480 Title I in Bolivia:  A Brief History 
- - - - - - - - - - - - - - - - - - - - - - 
 
¶2.  (C) In 2000, a bilateral agreement was signed between 
the USDA and the Bolivian Ministry of Agriculture to monetize 
wheat donations and use the proceeds to fortify the work of 
the Bolivian Plant and Animal Health Service (SENASAG).  In 
2001, the Vice Ministry of Public Investment and Foreign 
Financing (VIPFE) was designated to administer the funds for 
the Ministry of Agriculture and SENASAG.  The initial $3 
million project was for the control of hoof and mouth disease 
in the departments (states) of Pando and Beni.  In 2003, 
VIPFE began to raise concerns about the ability of SENASAG to 
administer the approved funds.  Following lengthy 
negotiations between all the affected parties, in early 2005 
an administrative unit (UNADE) was created to administer the 
PL-480 funded projects within SENASAG.  UNADE was staffed by 
two U.S. Animal and Plant Health Inspection Service (APHIS) 
employees and four SENASAG employees.  Until mid-2007, UNADE 
functioned well, successfully disbursing over $2 million in 
funding for agricultural projects.  Throughout 2007, 
resistance to UNADE controls grew as SENASAG became 
increasingly politicized.  Finally, following the donation 
of over a dozen pick-up trucks for a SENASAG fruit fly 
program (Ref. A), the administrative head of SENASAG, Oscar 
Sandy froze UNADE access to PL-480 funds.  The donated trucks 
sat unused for the rest of 2007 for fictitious 
"irregularities" in the procurement process and, in early 
2008, UNADE was disbanded.  No money was disbursed in 2008. 
 
¶3.  (C) Also in 2008, the PL-480 Secretariat was renamed 
Insumos Bolivianos and in September, Sandy was appointed as 
its director general.  While the international agreement for 
the Secretariat states that the USG should be consulted 
before a new director general is named, no such protocol was 
followed.  When the point was brought up, Sandy sent us a 
terse letter saying that the USG had no such right. 
Additionally, per a 2005 agreement, projects for Title I 
funds are to be agreed upon by an advisory board composed of 
two members of the Bolivian Ministry of Agriculture, the U.S. 
Regional Agricultural Counselor (based in Lima), and a 
representative from the Embassy.  In the absence of a 
majority decision, the vote of the U.S. Agricultural Attach 
is controlling.  At a June, 2009 meeting, Sandy announced 
that a Bolivian Supreme Decree had changed the composition of 
the advisory board and the USG would now have only one, 
non-controlling vote out of five.  For now, we have said that 
 
LA PAZ 00000871  002 OF 003 
 
 
an international agreement cannot be unilaterally changed. 
We are encouraging the Ministry of Agriculture to propose 
projects for the remaining, unprogramed $4 million in 
funding; however, Insumos may well be able to block these 
programs and chose to propose and approve whatever it sees 
fit.  (Note:  VIPFE has also frozen about $2 million in 
additional approved project funding designated for SENASAG. 
VIPFE claims that both that the audit performed at UNADE's 
closing was inadequate and that SENASAG does not have the 
administrative capacity to administer additional funds.  End 
note.)  Since the PL-480 became Insumos in 2008, we have 
received no official notice of exactly what funding remains 
in each of the accounts.  Both Insumos and VIPFE have told us 
that the break down is approximately $4 million under Insumos 
control and $2 million with VIPFE, but, despite requests, 
nothing has been provided in writing. 
 
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Ever Changing Authorities and an Anti-U.S. Bias 
- - - - - - - - - - - - - - - - - - - - - - - - 
 
¶4.  (C) One of the largest problems for most donors trying to 
work with the Bolivian government is the frequent turnover in 
leadership positions.  Over the past two years of trying to 
work out a way to move PL-480 projects forward, we have dealt 
with three ministers of agriculture, four vice ministers, and 
five SENASAG directors.  Each has had their own agenda and 
level of politization.  With the more hard-line authorities, 
we made no progress and, in fact, could never secure 
meetings.  Others seemed to promise progress, but 
advancements were ultimately vetoed by more political figures 
higher up, or the more pragmatic figures were removed before 
we could advance mutually agreed upon plans (Ref. B,C).  The 
most hostile figure was former Minister of Agriculture Susana 
Rivero, who went on to be Minister of Production.  While at 
Production, Insumos Bolivianos was created and may be her 
lasting attempt to control foreign aid designated for 
agricultural projects. (Note:  Rivero is also the minister 
who rejected USG wheat donations in 2008 out of "sovereignty 
concerns". End note.) 
 
- - - - - - - 
Turf Battles 
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¶5.  (C) As the Morales Administration issues decrees aimed 
at increasing Bolivian government control over foreign aid, a 
battle rages within the administration for which ministries 
will control the different aspects of the aid.  The primary 
players are the Ministry of Production and the Ministry of 
Planning.  However, the actual ministries seem less important 
than the personalities which have rotated through many of the 
leadership positions.  Currently, for the PL-480 monies, we 
are having to deal with VIPFE, which is located under 
Planning, and with Insumos, which is located under 
Production.  However, as the programs are designed to be 
administered by SENASAG, which is a part of the Ministry of 
Agriculture, any agreements must also be amenable to the 
leadership there as well. Moreover, despite the Morales 
Administration attempts to centralize control over foreign 
aid, in a June meeting, Vice Minister of Agriculture Tereza 
Morales complained about all of the different donor 
requirements made upon her office.  It appears that no one 
inside or outside of the government really knows yet who has 
the lead when it comes to foreign agricultural aid. 
 
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A Lack of Transparency and Political Use of Funds 
- - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶6.  (C) For the PL-480 funds, the biggest worry is the 
administrative capacity and highly politicized environment of 
SENASAG.  Unfortunately, despite a $10 million program from 
the Inter-American Bank and our institutional strengthening 
 
LA PAZ 00000871  003 OF 003 
 
 
programs, SENASAG has still not found solid, institutional 
footing.  As the director of the Inter-American Institute for 
Agricultural Cooperation (IICA) put it, "SENASAG is still 
more of a program than an institution."  SENASAG leaders are 
often more political than technical, and projects in the 
countryside are often used to advance the Movement toward 
Socialism (MAS) agenda.  As a result, we have been insistent 
that some sort of administrative controls be in place 
following the closure of UNADE.  Unfortunately, our efforts 
to help profesionalize SENASAG have not had much effect (Ref. 
C). 
 
- - - - - - - - - - - - 
The Quest for "Dignidad" 
- - - - - - - - - - - - 
 
¶7.  (C) "Dignidad" has become a catch phrase for the Morales 
Administration.  In the PL-480 context, we were told by an 
advisor to the Ministry of Planning that the composition for 
the Advisory Board had to be changed because it was 
"undignified" that the U.S. Agricultural Attach had an 
effective veto over any proposed programs.  He said that in 
today's Bolivia, this is simply not acceptable.  Working to 
establish an acceptable level of "dignidad" for the 
recipients of our aid will be a necessary part of any future 
donations.  Vice Minister Morales urged us to be patient with 
the "Change Process" and that in the end, it would be better 
for all parties. 
 
- - - - 
Comment 
- - - - 
 
¶8.  (C) The USDA Food for Progress Program is a small player 
in the donor field in Bolivia, but its experience in trying 
to work with the ministries of agriculture, planning, and 
production is not unique; frustration throughout the donor 
community is commonplace.  One the other hand, two additional 
Title I programs in Bolivia that directly fund the work of 
two NGOs have enjoyed great success and strong community 
acceptance and praise in the countryside.  Furthermore, USAID 
funds programs directly with NGO implementors and coordinates 
with the GOB as necessary and feasible.  This model ensures 
results and funding control.  The real difficulties arise in 
dealing with the Bolivian state directly.  The Morales 
Administration may wish to administer all foreign aid through 
the state apparatus, but the structure and capability of the 
government is many years away from realizing that goal. 
 
URS